US Congress Bill to Exempt Small Cryptocurrency Expenditures from Taxes Returns, Could This Drive Crypto Adoption?January 17, 2020
The US Congressional bill seeks to exempt the daily cryptocurrency transactions and purchases coming from capital gains taxation has been reintroduced.
On January 16, the said bill was introduced to the US Congress by Representatives Suzan Delbene (D-WA) and David Schweikert (R-AZ). But, if you’ll remember, Schweikert already introduced the same bill. However, the current one comes with a greater exemption.
How the Current One Differs?
Three years later, a congressional bill was reintroduced, and it is called “The Virtual Currency Tax Fairness Act of 2020. This bill is seeking to exempt the cryptocurrency expenditures that are considered to be personal transactions coming from capital gains taxation. This suggests that the users do not need to report once they used any cryptocurrency assets whose value had changed as per value of the USD on the daily expenses.
The current bill is aiming to address the different conflicts brought by the IRA following the agency’s statement that Bitcoin (BTC) and other crypto assets can be somewhat some form of property, back in 2014. Meaning, any small or big transactions will lead to taxable even. Then, the users are liable for the capital gains taxation.
From this IRS’s determination, a criticism was born, where the use of cryptocurrency is the result of involved tax burdens.
Based on the bill, taxpayers are exempted from reporting in the case that the gains are less than $200. As for the previous bill, the users are only exempted from reporting if the gains are slightly higher at $600.
Moreover, the bill classifies it as a gross income. The bill states, “Gross income of an individual shall not include gain, by reason of exchange rates, from the disposition of virtual currency in a personal transaction, (as such term is defined in section 11 988(e)). The preceding sentence shall not apply if the gain which would otherwise be recognized on the transaction exceeds $200.”
Is It Possible for The New Act to Drive the Crypto Adoption?
In reality, the existing tax finds it hard to come up with cryptos. That is because crypto assets sometimes behave as commodities, sometimes as investments, or there are times they act as other currencies. However, the reintroduced bill will simplify everything for both crypto users and traders. Besides, many are wondering whether or not the new act could lead to crypto adoption.
In the case that the US Congress approved the bill, this suggests that it will cover the transactions that took place past the 31st December, 2019.
Coin Center, a Washington-based cryptocurrency firm, continues to exert effort towards the feasible solution in clearing the barrier to crypto adoption. It was reported that the research group collaborated with Representatives Schweikert and DelBene to reintroduce the idea to the attention of lawmakers.
The research group writes, “This easy solution to an obvious problem with today’s tax treatment of cryptocurrencies would help level the playing field for this technology.”